4 Best Dividend ETFs in Canada for Income (June 2026)
The best dividend ETFs in Canada include VDY.TO (0.22% MER), XDV.TO (0.55%), ZDV.TO (0.39%), and DGR-B.TO (0.38%). VDY, XDV, and ZDV focus on Canadian dividend income, while DGR-B adds U.S. dividend growth exposure. These ETFs suit TFSA, RRSP, or non-registered investors seeking regular income and diversified cash flow.
Canadian investors looking for portfolio income often start with dividend ETFs because they can deliver regular cash flow without the stock-picking risk of owning just a handful of bank or utility names. Top options like VDY.TO, XDV.TO, and ZDV.TO focus on Canadian dividend payers, while DGR-B.TO adds U.S. dividend growth exposure for investors who want more sector diversification.
But the best dividend ETF in Canada is not always the one with the highest yield. VDY.TO leans heavily into large Canadian banks and energy companies, XDV.TO uses a more selective rules-based approach with just 30 holdings, ZDV.TO spreads its portfolio more broadly across Canadian dividend stocks, and DGR-B.TO focuses on U.S. companies with dividend growth characteristics rather than simply chasing headline yield.
In this guide, we break down the best dividend ETFs in Canada by comparing yield style, diversification, fees, and tax fit so you can choose the right ETF for your TFSA, RRSP, or non-registered income portfolio.
At a Glance: Quick Comparison
Side-by-side snapshot of fees, yield, and returns. Data updates daily.
| ETF | MER | AUM | Yield | YTD | 1Y |
|---|---|---|---|---|---|
Top VDY.TO Vanguard FTSE Canadian High Dividend Yield | — | $8.4B | 3.24% | +21.48% | +51.45% |
XDV.TO iShares Canadian Select Dividend Index ETF | — | $2.6B | 3.39% | +17.42% | +43.45% |
ZDV.TO BMO Canadian Dividend | 0.35% | $1.8B | 2.70% | +17.95% | +41.58% |
DGR-B.TO CI WisdomTree U.S. Quality Dividend Growth Index ETF | — | $330M | 1.17% | +8.96% | — |
What Is an ETF?
A dividend ETF is an exchange-traded fund that holds companies known for paying regular dividends, usually in sectors like financials, energy, utilities, telecom, and consumer staples. Instead of relying on one or two dividend stocks, a dividend ETF spreads your income stream across a basket of companies, reducing single-stock risk.
For example, VDY.TO tracks a high-dividend Canadian index and currently holds 56 stocks, while XDV.TO focuses on 30 high-yield Canadian companies selected using dividend growth, yield, and payout-ratio screens. ZDV.TO uses a yield-weighted portfolio of 61 Canadian dividend stocks, and DGR-B.TO gives Canadians exposure to a U.S. quality dividend growth strategy with about $439 million in assets and a 0.38% MER.
Dividend ETFs are popular in TFSAs and non-registered accounts because they can generate regular cash distributions, but the tax treatment depends on what the fund actually holds. Canadian dividends are generally more tax-efficient in non-registered accounts than foreign dividends, while U.S. dividend ETFs like DGR-B.TO can face withholding tax if held outside an RRSP.
The 4 Best ETFs: Ranked & Reviewed
Detailed breakdown of each pick with live data.
Vanguard FTSE Canadian High Dividend Yield
$75.66
+21.48% YTD
Vanguard FTSE Canadian High Dividend Yield Index ETF seeks to track, to the extent reasonably possible and before fees and expenses, the performance of a broad Canadian equity index that measures the investment return of common stocks of Canadian companies that are characterized by high dividend yield. Currently, this Vanguard ETF seeks to track the FTSE Canada High Dividend Yield Index (or any successor thereto). It invests primarily in common stocks of Canadian companies that pay dividends.
Returns
YTD
+21.48%
1Y
+51.45%
3Y
+28.21%
5Y
+18.26%
iShares Canadian Select Dividend Index ETF
$46.79
+17.42% YTD
Returns
YTD
+17.42%
1Y
+43.45%
3Y
+24.92%
5Y
+14.02%
BMO Canadian Dividend
$32.46
+17.95% YTD
Returns
YTD
+17.95%
1Y
+41.58%
3Y
+24.24%
5Y
+15.83%
CI WisdomTree U.S. Quality Dividend Growth Index ETF
$63.70
+8.96% YTD
Pros & Cons
Pros
- Diversified income exposure without having to pick individual dividend stocks
- Monthly cash distributions are available from ETFs like VDY.TO, XDV.TO, and ZDV.TO
- Canadian dividend ETFs can be more tax-efficient in non-registered accounts than foreign dividend funds
- You can choose between high-yield Canadian income strategies and dividend-growth exposure through DGR-B.TO
Cons
- Many Canadian dividend ETFs are heavily concentrated in financials and energy
- Higher-yield ETFs do not always deliver the best long-term total return
- XDV.TO carries a much higher MER (0.55%) than broad-market equity ETFs
- U.S. dividend ETFs like DGR-B.TO can create withholding-tax drag and currency exposure
Compare These ETFs Head-to-Head
Drill into a side-by-side breakdown of performance, AUM, and yield.
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Frequently Asked Questions
What is the best dividend ETF in Canada?
VDY.TO is often one of the top picks for Canadian dividend investors because it combines a relatively low 0.22% MER with a large asset base of about $6.6 billion and monthly distributions. Investors who want a broader Canadian dividend basket may prefer ZDV.TO, while those prioritizing dividend screening may look at XDV.TO despite its higher 0.55% MER.
What’s the difference between VDY.TO and XDV.TO?
VDY.TO tracks the FTSE Canada High Dividend Yield Index and currently holds 56 stocks, while XDV.TO uses a narrower rules-based strategy built around 30 high-yield Canadian companies. VDY.TO is cheaper at a 0.22% MER versus 0.55% for XDV.TO, but XDV.TO may appeal to investors who want a more selective dividend screen.
Are dividend ETFs good in a TFSA or RRSP?
Yes, dividend ETFs can work well in both accounts, but the best location depends on what the fund holds. Canadian dividend ETFs like VDY.TO, XDV.TO, and ZDV.TO are straightforward TFSA holdings, while a U.S. dividend ETF like DGR-B.TO may be more tax-efficient in an RRSP because foreign dividends can face withholding-tax drag in a TFSA or non-registered account.